Retailers, police take on new breed of shoplifters 11/12/2007
By MAGGIE SHEPARD
A new generation of shoplifters, using smart and cooperative tactics, is sucking the life out of local big-box retailers.
The retailers, including Target, Wal-Mart and Walgreens, are fighting back by banding together with police to share intelligence on the month's hot items, the new shoplifting methods and the teams of offenders who are popping up on each retailer's radar.
"Nowadays, it is a lot more of an occupation for these guys," says Lt. Matthew McWethy, in charge of Albuquerque Police Department's property crime unit.
"They are not stealing booze or one CD or one tool. They are going in and hitting five, six, seven stores in a day. It is more like commercial theft."
It's actually called Organized Retail Crime and results in an estimated $30 billion worth of merchandise around the nation annually, according to the National Retail Federation.
In addition to the local cooperation between retailers and police, the popularity, or profitability, of the new "profession" has prompted the FBI this year to create a specialized Organized Retail Theft Task Force. A national database has emerged for store security managers to share information.
"It's the biggest thing we're working on now," said Ken Cox, Target's district manager of security for New Mexico.
He and other retailers started meeting together with police in April.
They are working on a plan to share photos of their most prolific shoplifters. Already, they share which items are being targeted.
McWethy says the shoplifting teams seem to operate with a shopping list.
"They have specific targets. They want Chanel No. 5, the 10-ounce bottle. So they go in and swipe every bottle off the shelf," McWethy said.
With that in mind, Cox has his teams zero in on the hot items.
"If I know they are stealing razors, then I'll sit and watch the razors," Cox said.
Razors consistently make the list of most-stolen items, he said.
"It's traditional stuff: iPods, CD players and over-the-countertop products, DVDs," he said.
Socks, clothing and perfumes also make the list, McWethy said.
Most of the goods end up at flea markets, either here or in other cities, he said.
"They are making thousands of dollars of profit," he said.
"We know it was stolen, but the problem is, the tags are pulled and there is no way for us to tell."
McWethy said his officers are working with retailers to develop a way for police to access retail records of label and identification numbers so products can be tracked.
Cox said such a system is years away from development.
"Right now we're just in the infancy stages (of cooperation)," Cox said. "But it's the common knowledge because we're all focused on the same thing."
Promoting Sales While Preventing Loss 01/06/2008 - Urgent!
Product Protection - Promoting Sales While Preventing Loss
By: Fiona Branton Posted: November 10, 2007
#Nov07-24
It wasn’t too long ago that the best way to deter shoplifters was to lock up your high-risk, high-value products or keep them behind the counter. But with ever-increasing competition and shrinking margins, successful retailers need to have their merchandise out on the sales floor, where potential customers can touch it, examine it, and try it on.
While EAS and CCTV technologies offer tried-and-true ways to reduce losses due to theft, retailers are partnering with product-protection solutions providers to develop a variety of customer-friendly solutions to supplement those tools. The newest solutions are designed not only to protect the merchandise, but to help sell it, too.
Retailers are very clear about what they need in the product protection areas. They want solutions that make it as difficult as possible for potential thieves to get to and remove merchandise, while at the same time, make it as easy as possible for customers to examine and purchase it. They want solutions that are affordable and easy for sales associates to use and that allow customers to shop at their own pace, unintimidated by salespeople hovering over them while they try on or examine merchandise.
Jon Roberts, product protection manager for CVS/pharmacy, describes his company’s philosophy like this: “The EAS program is the backbone of our product-protection strategy upon which we build all other solutions. EAS is the first line of defense, and it has no interference in the shopping experience for our customer. All changes to the current environment need to deliver the appropriate ROI for the business and improve on the customer shopping experience as it is today.”
Untether Your Physical Protection
Cables, lanyards, hard tags, spider wraps, and security bars are an integral part of almost every retail setting. Security products vendors are working to find ways to improve their functionality as security devices as well as to make the devices less intrusive. Battery-powered alarms, combined with more flexible wire lanyards in a variety of sizes, are eliminating the need for customers to have to find a clerk to release items. These compact, battery-operated, cable-lock devices can be attached to purses, luggage, backpacks, apparel, and a plethora of other items that customers want to be free to pick up and examine while shopping.
“We want to have open displays, where people can try on sporting apparel and look in the mirror without having to wait for an associate to unlock the garment,” says Dave Lund, director of LP for Dick’s Sporting Goods. “The new battery-operated apparel tethers and cable locks give customers the freedom to try on different sizes and move around the store with the merchandise. The tethers have five-year batteries, so we can use them year after year.” Just as importantly, the tethers provide a visual deterrent to would-be thieves, as well.
Cables, hard tags, and spider wraps are available with several alarming options. The lowest-cost versions sound an alarm if the product is removed from the store without proper deactivation. The next level includes an alarm that sounds if the devices are tampered with in the store. The latest technology provides security at three levels:
1. The first alarm sounds if merchandise or its security device is tampered with inside the store.
2. The second alarm sounds if the item passes through an EAS field without being deactivated.
3. The third alarm, also triggered by the EAS field, starts a continuous alarm ringing on the stolen item, which helps identify thieves after they leave the store.
The continuous ringing from the stolen product relieves store employees of having to risk mistakenly accusing an innocent customer who happens to be leaving at the same time as the thief, making this solution attractive for busy retailers that typically have large numbers of customers leaving the store at the same time. The alarms also are audible through foil-lined bags that professional thieves often use.
In response to retailers’ requests for easier and more secure ways to manage keys to locking cases and fixtures, solutions vendors are developing keys that use programmable infrared (IR) technology. These can be programmed to work only in specific stores and to time out after a given amount of time. They can be reprogrammed as necessary when employees turn over, making keys that terminated employees had access to unusable.
Advances in EAS Tags
While EAS tags have been around for a long time and are used in virtually every retail segment, improvements to functionality and effectiveness continue to be made. To facilitate source tagging, different types of EAS tags and labels are now available that can be applied at the manufacturing stage to virtually any type of product or packaging, including challenging products such as cosmetics, jewelry and watches, eyeglasses, bottles, sporting goods, and various do-it-yourself items. Universal Surveillance Solutions recently introduced a new pinless EAS tag that doesn’t tear or leave holes in garments. Since it’s small and unobtrusive, it doesn’t detract from merchandising displays and is less cumbersome for customers when trying on apparel.
To provide an extra layer of in-store protection, TAG Company’s new series of “smart” EAS tags sound an alarm if they are tampered with in the store, such as if a customer tries to cut a tag off a garment. These tags also act as traditional EAS tags, sounding if the merchandise is passed through an EAS pedestal without being deactivated.
Finally, several large apparel retailers are adopting visible source tags (VST) in place of the more traditional sewn-in labels. Much like a traditional hard tag, the VST, which is applied at the manufacturing level, offers a higher level of security and deterrence than the sewn-in labels.
Consumer Electronics
Perhaps the biggest area of growing need for new product protection solutions is in the consumer electronics segment. As consumer electronics devices grow in sophistication and shrink in size, retailers of digital cameras, camcorders, cell phones, iPods, and PDAs are looking for better ways to display these types of products. Prospective customers want to comparison shop by trying out the devices’ functions before deciding to purchase. In order for customers to fully grasp the products’ features, which will determine the brand or model they will purchase, it is critical that the products’ displays and controls are functional.
As a result, recent developments in this area have focused on displays that provide both security and power. These solutions operate off either battery or AC power, so they can be moved around and set up anywhere without worrying about wires. They come in a variety of sizes and styles, and can be used with retractable tethers that allow customers to pick up the device, turn it completely around, and interact fully with it. Most have audible alarms that are triggered when the display is tampered with, as well as visible indicators to let would-be thieves know they are armed. They can be changed out in minutes, allowing retailers to set up temporary displays or move displays around at a moment’s notice. As an added bonus, since customers are forced to return the devices to their stands after finishing with them, they keep your merchandise displays organized, attractive, and looking the way merchandising teams want them.
Until recently, laptop computers were a particular challenge for retailers. People buy laptops because they are lightweight, sleek, and compact. “We used to use standard laptop lockdowns that sounded an alarm if someone tried to remove them,” says Kevin Ach, director of LP for Office Depot. “The security devices were effective—they prevented anyone from walking away with the devices—but they were large and clunky, which detracted from the products. Our merchandising group wanted something that was less bulky and that would allow customers to appreciate the laptops’ designs and attributes.”
Office Depot worked with Protex International to design an improved display unit using Plexiglas to form unobtrusive lockdown bars. The laptop...or DVD player...sits on an aluminum track that is attached to the counter or a shelf. The screen-bar assembly locks each laptop into place on the aluminum track, preventing movement by unauthorized personnel, but at the same time permitting customers to use the computer’s keyboard and controls (see photo above).
Screen bars are available in several sizes to accommodate a wide range of products. Each track holds multiple laptops and is designed with a sliding track system that offers retailers the freedom to quickly and easily reposition their merchandise, or alter the number of items on display. This system is mechanical, but can be used in conjunction with electronic alarms for additional security. Since implementing the new laptop lockdowns, Office Depot has seen a marked improvement in sales of those items.
“We also significantly improved the sales of our digital cameras when we started using security devices that provide power as well as alarms,” adds Ach. “Now, customers can handle the equipment and test their functions before deciding which one to purchase. This has led to far fewer returns on these products.”
For larger items, such as plasma and flat-panel TV screens, self-contained, reusable electronic alarm sensors are available. One end is attached to the screen, while the other is attached to a countertop or stationary display fixture. If any sensor is removed or the cable is cut, the alarm will sound.
Fixtures
Store fixtures have evolved, as well, to help provide different levels of security where needed. At CVS/pharmacy where it is imperative to allow customers to have access to merchandise, Roberts is implementing new “intelligent” fixtures that allow the retailer to openly display high-shrink merchandise, such as razors, cosmetics, and batteries. Anti-sweep fixtures have hooks with exaggerated curves in them that make it difficult to remove more than one of an item at a time. These hooks can be locked to the gridwall or slatwall to prevent thieves from taking the entire hook.
For a higher level of security, locking devices are available that can be inserted on the hooks behind several items of merchandise. This way, the retailer can make a sufficient quantity of an item available to satisfy that day’s estimated demand. After those are sold, a store associate would have to unlock the remaining items.
Fully locking hooks are an option for extra-high-risk or high-value items. With these displays, customers can see, touch, and examine the merchandise, but they can’t remove it without having a store associate unlock it. Swivel tabs can be attached to merchandise or to keepers or safers that allow merchandise to be easily rotated 360 degrees so customers can see all sides even while it is locked up.
Time-delay fixtures, the newest addition to the marketplace, allow only one piece of merchandise to be removed from the hook within a certain amount of time. Popular for infant formula, razor blades, and similar items, these fixtures effectively put a stop to sweeping. Infant formula-specific fixtures allow the customer a clear view of the product, but only one canister can be removed in a given amount of time.
Greater Collaboration Leads To Successful Solutions
Increasingly, vendors are partnering with retailers to design other product-specific fixtures to address especially challenging high-risk products, such as golf clubs. In these cases, the fixtures double as attractive, efficient displays for the products, but include alarms and/or tethers to keep the products from being removed.
Dick’s Sporting Goods’ Lund notes that vendors frequently visit their stores to see exactly what the retailer needs, and they are often willing to develop new or modified products to solve niche problems.
“As a sporting goods retailer, we carry many specialty items that require unique protection measures,” says Lund. “We work regularly with security vendors to develop innovative solutions to meet our special needs, such as the back clamps we use for baseball bats, golf clubs, and the like. We don’t carry large quantities of those types of products, so it’s essential that we minimize the number we lose to shoplifters. It’s very disappointing to our customers if they come in to purchase something like a hockey stick for the new season and it’s out-of-stock due to theft. The vendors have worked with us to develop solutions and then to reengineer them as we gain insight into how shoplifters are reacting to them. I think we’ve been involved in three or four generations of a couple of the solutions we use.”
Lance Weeden, director of sales for Alpha Security, says collaboration with retailers to develop new solutions is an ongoing process. Although occasionally a retailer will approach the vendor with a specific security challenge, more often than not, new products evolve out of the research the vendor conducts through interaction with a wide range of retailers.
“We contact retailers in all market segments and ask them what their five or six highest shrink items are,” says Weedon. “One of the key responsibilities of our product managers is to go out to the stores and talk with the store managers, associates, and LP departments. We also host technology reviews at our headquarters. We bring the retailers’ common concerns to our product engineers, who work on developing model solutions. We then bring those models back to the retailers for their input.”
If there’s sufficient buy-in from the retail population, Alpha will put the new solution into production. Weeden admits that not all retailers’ problems can be solved through this process. If a problem is too unique, or involves a small niche market, it may not generate a large enough volume to be cost-effective, at least given current technology.
In addition to working with retailers to develop product-specific and customer-friendly solutions, security product vendors are working more closely with merchandise manufacturers. “We want to stay on top of new developments in merchandise, so we can design solutions to meet evolving needs or to address the new challenges that new products bring, as occurs frequently in the electronics market,” says Weeden. “By being aware of what new products are coming out, or what changes are being made, we can have effective solutions available at the same time the new products are introduced, so retailers don’t have to suffer through a period of vulnerability while protection solutions catch up.”
Vendors are also working with merchandise and fixture vendors to develop solutions that are already built into the merchandise and/or fixtures, eliminating effort on the retail end. In this vein, retailers in all markets are seeing an increase in the number of merchandise vendors who are offering source tagging.
Source tagging has been very successful for manufacturers of electronics, CDs, software, and batteries, whose customers convinced them of the long-term benefits of source tagging, including reduced shortages and quicker sell-throughs. “We are continuing to work with our vendors to encourage them to source-tag merchandise with EAS tags,” says Office Depot’s Ach. “While we’ve made a great deal of progress in that goal, we’d still like to see more of our vendors do that.”
What’s on the Horizon?
The trend in product protection solutions appears to be to make available an ever-growing array of products that can be mixed and matched to meet retailers’ needs. There are products for every risk level, merchandise type and size, and level of desired customer interactivity, and is making it possible for retailers to craft customized solutions that minimize shrink and maximize sales in their own unique settings.
Several retailers identified some unmet needs they’d like to see addressed, however. Lund would like to see more affordable specialty protective devices for the golf clubs, baseball bats and mitts, and other specialty items that Dick’s sells that sound alarms when tampered with in-store. One of his challenges is managing the variety of devices his stores use. “Using a smaller number of devices offers several advantages,” explains Lund. “it’s easier to train employees how to use them, and you don’t need multiple detachers to remove tags and cables. But we carry such a wide variety of merchandise that we end up needing a lot of different solutions. I’d like to see more multiple-use devices that we could use on a range of merchandise.”
At CVS, Roberts is looking for more affordable fixtures that are scalable so that they can be used from low- to high-risk environments. “For example, I’d like to see a shelving system that could be used with or without built-in intelligence, along with having the option to build in the right level of protection for the high-risk items,” he notes. “I feel that time-delay fixtures and affordable intelligent shelving will play a part in achieving our product protection goals in the future, along with continuing to explore layout design options and process improvements.”
Even though it’s still in the testing stage, RFID (radio frequency identification) offers another potential loss prevention tool. While RFID’s most likely real value for retailers lies in inventory management, it builds on loss prevention efforts by adding an extra layer of product movement reporting. Retailers can combine item-level RFID tracking with DVR technology to provide the ultimate view of who is moving merchandise and when and where they’re moving it. Catching someone on camera as he or she picks an item off the shelf only tells you that he or she took it from the shelf. Tracking the location of the item via an RFID tag tells you whether the product has left the store without being purchased.
The ultimate goal...embraced by LP and store merchandisers alike...of keeping product on the sales floor, not locked behind a counter or in a case, is becoming easier to achieve. However, CVS’ Roberts offers a valuable reminder applicable to all retailers—essentially, that technology alone will not solve the shrink challenge.
“I believe the best way to manage high-risk product is to work collaboratively with all internal departments in your company and the supplier community that sells you high-risk product,” he concludes. “Taking a holistic approach to product protection and developing a layering approach when implementing solutions for high-risk product is a key in the management of high-risk items.”
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FIONA BRANTON is a small business owner in Erie, Pennsylvania, and freelance writer on a variety of business topics. She has previously worked as a copy editor for a national magazine publisher. Prior to that, she garnered retail experience as the manager of a small, specialty store and later as the customer service manager for a national department store. Branton can be reached at fionabranton@yahoo.com.
Pre-Employment Screening 01/06/2008
Pre-employment Screening Practices in the Retail Sector
By: Walter E. Palmer, CFI, CPP, CFE Posted: November 10, 2007
#Nov07-54
The number of employers who conduct pre-employment background checks on job applicants has increased dramatically in recent years. Many studies attribute the increase to the events of 9/11, corporate corruption scandals such as Enron and WorldCom, and increased litigation costs and jury awards for negligent hiring. Other influential factors are turnover, recruitment costs, absenteeism, and resume/application fraud. This survey focuses on the current pre-employment background screening processes used in the retail industry.
An effective program relies on multiple screening methods to ensure relevant information about an applicant is reviewed before he or she is placed on the payroll. Screening processes such as assessments, drug tests, criminal history checks, and mutual associations should be considered when developing or reviewing a pre-employment screening program. Several of the surveyed companies have developed a tiered screening process with increasing costs as the applicant passes each level of the hiring process.
All of the companies surveyed outsourced their background screening program. Although it was outsourced, the program was managed by a loss prevention and/or a human resources manager. They also used the background company to provide most, if not all, of their background screening processes. This allowed them to leverage the price of the services.
This survey not only provides a collection of statistics and data but gives a few examples of how companies have structured certain process in their background screening program. According to a recent report from the Society for Human Resource Management, only 19 percent of large companies consider their current background screening process effective. Whether you are revamping your pre-employment screening program or developing a new one, this survey provides insight into the methods employed at ten large U.S. retailers.
Purpose and Approach
The purpose of the survey was to benchmark large retailers’ current pre-employment screening programs. The survey was sent to the most senior-level loss prevention executive in ten leading U.S. retailers. The surveyed retailers ranged in store count from 250 to over 3,000 locations and included both hardline and softline retailers. The survey focused on five types of screening processes—drug testing, assessments, credit checks, criminal history, and motor vehicle checks. The scope of the survey included store, distribution centers, and corporate levels at each retail company. The survey was conducted in March, 2007.
The survey did not attempt to evaluate the ROI from a pre-employment background screening program. While this is outside the scope of this survey, many retail companies have an internal ROI process measuring programs such a pre-employment screening.
The chart below is a summary of the responses to the five primary questions. Conducting an assessment is clearly the most common pre-employment screening method employed, followed by conducting a criminal background check.
Screening Type Store Distribution Center Corporate
Drug Screen 50% 60% 40%
Assessment 90% 40% 40%
Credit Check 0% 0% 33%
Criminal Background Check 70% 80% 70%
Motor Vehicle Record Check 0% 60% 40%
Do You Conduct Pre-employment Drug Screening?
The survey revealed that one half of the companies surveyed conducted pre-employment drug screening at the store level, sixty percent at the distribution center and forty percent at the corporate level.
Although this survey is focused on pre-employment screening, it is important to note that two-thirds of the respondents conducted some type of post-accident drug screening. Most notably, post-accident drug testing was more prevalent in the distribution centers where more accidents occur.
Are Assessments a Part of Your Pre-employment Screening Program?
Conducting an integrity, personality, or aptitude assessment can be an initial step in the screening process. These types of assessments are normally administered electronically or in the form of paper-and-pencil tests.
Ninety percent of the companies used an assessment at the store level. Assessments are most common at the store level since they can be administered with relatively low cost and provide an excellent first layer in the screening process. There were two companies that have kiosks in place for applicants to complete an assessment along with their application. One surveyed company stated they only perform an assessment on the final two candidates for a vacant position.
Do You Conduct Criminal Background Checks?
Criminal background checks was one of the most prevalent screening process conducted by the surveyed retailers. Seventy percent of the respondents indicated they conduct a criminal background check at the store level.
One retailer concluded that 40 percent of their turnover occurred within sixty days of employment and now conducts criminal background checks on associates who maintain employment past sixty days.
All of the retailers used a third party that conducted their criminal background checks. The criminal checks were conducted at the county level and went back five to seven years. Over two-thirds of the respondents indicated they also conduct a social security trace and a mutual association query in conjunction with the criminal background check. The social security trace validates the social security number provided is active.
Mutual association searches allow retailers to query databases for applicants who may have been dismissed by another retail company for dishonesty. Retail companies who participate in a mutual association agree to provide information on associates who were dismissed for dishonesty in their organization.
The possibility of conducting background checks on multiple criteria allows retailers to set up different approaches depending on the position or working environment. For instance, one company developed a tiered approach to their criminal background check based on level of position.
Another retailer had a similar tiered approach, but the criminal background check is conducted post-employment and is tiered on store, distribution center, and corporate level.
- Store Level—Managers
- Distribution Center Level—All hourly associates (only check county of residence)
- Corporate Level—Director level positions and above
The survey also asked who administers the criminal background check process. Eighty percent of the respondents indicated that it is a function of loss prevention and/or a collaborative effort with human resources. In this collaboration, two of the respondents explained that human resources initiated the criminal background check and forwarded any applicants with a criminal history within their established guidelines to loss prevention for further validation. This provides loss prevention an opportunity to investigate and confirm the derogatory information.
Are Credit Checks a Part of Your Screening Process?
None of the surveyed companies conducted a credit check on applicants at the store or distribution center level. Thirty-three percent of the companies conducted a credit check at the corporate level for finance or C-level positions.
One retailer responded that they conduct credit checks on all applicants at their call center. The senior-level loss prevention executive stated their associates process sales on credit cards from customers calling in and this access warrants a credit check. Another retailer responded they recently implemented a criminal background check for corporate employees who handle credit card data.
Do You Conduct Motor Vehicle Record Searches on Applicants Who May Drive a Company Vehicle?
Historically, retail associates at the store level do not drive a company vehicle, therefore this question was only asked at the distribution center and the corporate level (district and regional positions were categorized as corporate). Sixty percent of the respondents conduct a motor vehicle record check at their distribution centers. Some of the surveyed retailers use contracted delivery companies, so they defer the responsibility to their contractor. One of the respondents who indicated they conduct motor vehicle searches at the corporate level stated their insurance company mandated the searches be conducted on anyone who drives a company vehicle.
Summary
The findings in this survey revealed that each company had an established pre-employment screening program, but there were several variations in the methods and processes used. As the survey pointed out, one retailer began conducting criminal background checks on associates who completed sixty days of employment since forty percent of the company’s turnover occurred before associates reached this mark. While this method may not be a viable option for all retail companies, it provides a unique perspective on conducting criminal background checks.
Although this survey focused on pre-employment background checks, consideration should be given to incumbent background checks. Although an associate may pass a pre-employment background check, their history since employment may reveal negative information relevant to their position. If a retail company employs delivery drivers, they may want to review each driver’s motor vehicle record on an annual basis to ensure they are retaining the most qualified drivers.
Selecting the right pre-employment screening provider is vital to the success of the program. Many screening companies offer a customized package for their clients. The packages are a combination of screening processes, and the pricing is typically based on volume. One of our respondents indicated they have used the same background check provider for several years, but conduct an RFP on an annual basis to ensure they are getting the best pricing and service in the industry.
Retail companies have recognized the need to conduct background checks for quite some time. While the scope and method of pre-employment background screening programs may differ among retailers, the purpose remains the same—to hire the most qualified candidates. As the demand for background checks continues to increase, this survey provides some common practices in the retail industry that can be used as a benchmark for your organization.
If you would like further information or details regarding this survey, please contact the author.
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WALTER E. PALMER, CFI, CPP, CFE, is CEO/president of PCGsolutions, a loss prevention consulting, training, and education firm. He has twenty-plus years experience in retail loss prevention and is a frequent speaker at industry conferences and as a guest lecturer for Eastern Kentucky University’s executive lecture series. Palmer is active in professional development and training as member of the American Society for Training and Development, the International Society for Performance Improvement, and the American Management Association. He can be reached at 859-271-3140 or by email at wpalmer@PCGsolutions.com.